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Latin America Is Home To Innovative Financial Tech Firms

Latin America Is Home To Innovative Financial Tech Firms

The technology community was being reborn in Latin America, and CVOX ran the first hackathon. Then a few years ago Citi approached them to help with an innovation strategy, suggesting something around SMS. Image by news.efinancialcareers.com

Last autumn MasterCard asked the CVOX Group in Miami to put together a demo day in Brazil for startup tech firms. They expected about 15 applicants. Instead they got 236, and all but 36 of those were strong.

“That was very surprising,” said Ray Ruga, a co-founder of the firm. It just might have something to do with a population of 158 million millennials and the rapid growth of smartphones — 60 percent penetration projected by 2016.

“In Brazil, Itaú is a technologically, digitally advanced bank,” Ruga said. “They are a truly omni-channel digital bank; there aren’t many of those in the region. While there is some good technology being produced throughout Latin America, banks are still trying to cobble it together somewhat. They are culturally behind in promoting the adoption of the more innovative ideas.”

With 300 banks, compared to more than 7,000 in the US, Latin American finance hasn’t faced the competition that North American banks confront. They have been slower in adopting innovation.

Ruga and Maria Mancuso, the other co-founder of CVOX, had worked together for Citi in Latin America before leaving to start their own communications firm focused on financial services.

“Eighteen months after starting, we went into the financial crisis and lost almost all our business. In the process of retrenching we ended up working with a lot of technology firms. A venture capitalist client who was making portfolio investments in some tech companies asked us to provide communications and marketing for them.”

The technology community was being reborn in Latin America, and CVOX ran the first hackathon. Then a few years ago Citi approached them to help with an innovation strategy, suggesting something around SMS.

“But we said SMS is like horse and carriage, why not look at smartphones. We created Citi Mobile Challenge which was a huge success for them, and now they are doing it globally.” Since then CVOX has focused on innovation and technology, especially in financial services, while continuing to work with other firms doing business in Latin America.

Now Citi has seven innovation labs around around the world, and the one in Miami is focused on Latin America. “What became apparent is how far behind the innovation curve the financial services industry was,” Ruga said. “These banks have no idea what is going on. As we delved deeper and deeper, we saw many reasons. The banking culture is very conservative, risk averse, and very political. So you have structures that are not built for innovation, because innovation is inherently risky.”

Innovation in financial services tends to happen outside banks and then the banks may acquire the technology, he added. “We decided to focus on educating financial services on the technology and innovation front.”

They set up the first FinTech Latam conference last year and drew strong attendance from Latin America, but also three bankers from Flushing Bank in New York. “They said our agenda had what they were looking for, which shows that technology is geographically agnostic.”

This year the conference will become Fintech Americas — a 1.5 day program exploring the technologies, ideas and trends poised to disrupt both the US and Latin America’s financial landscape.